GM. Welcome back to Milk Road AI, where we follow the money, the models, and the mayhem behind the AI race.
Here’s what we got for you today:
- ✍️ Inside the AI arms race
- 🎙️ The Milk Road AI Show: The AI Bubble Fear Is Wrong... What the Market Is Missing w/ Duncan & Patrick
- 🍪 Adobe’s AI training practices are under fire
Launching The Energy Network on Solana, Fuse Energy has just secured $70M in Series B funding. Discover the future of energy now.
Prices as of 10:20 AM ET.
GOOGLE VS. OPENAI: THE AI WAR NOBODY CAN STOP
Forget the Super Bowl. Forget the World Cup.
Today, we are watching the Battle of the Century unfold in real time.
And no, I’m not talking about Elon vs. Mark in the cage (is that still happening?).
I’m talking about the invisible, cutthroat war happening right now between OpenAI and Google.
So grab your popcorn, because this will define who gets to be the operating system for the entire human race and who just becomes a footnote in the history book.
Or something far worse: getting acquired by Yahoo.
Here is the story about how the AI landscape just turned into a Squid Game for billionaires.
🚨 The panic button phase: A timeline of chaos
If you are a regular investor, you know that big businesses usually like to move slow and steady.
You release a product, you wait a year, you sip a margarita, you look at a spreadsheet.
Well, that era is dead.
We are now in the "If we don't win this week, we die" phase of the AI war.
It’s like watching two kids slap fighting over the front seat of the car, except the car is worth trillions.
Just look at the absolute chaos of releases:
- Nov 12: OpenAI releases GPT-5.1. Champagne flows. They are the Kings.
- Nov 18: Six days later, Google drops Gemini 3 Pro and steals the crown.
- Dec 11: OpenAI rushes out GPT-5.2, a defensive move to stop the bleeding.
- Dec 17: Google drops Gemini 3 Flash. Faster, cheaper, and absolutely ruthless.
So… who’s actually winning?
If we look at the raw active users numbers from November, OpenAI still looks like the heavyweight champ.
ChatGPT is sitting pretty with 810 million monthly users.
That is a massive lead over Google Gemini's 346 million users.
But if you look in the rearview mirror, the object is closer than it appears.
In January, Gemini only had 145 Million users.
That means Google has more than doubled its user base in under a year.
(Yes, OpenAI did the same thing, but they had a big head start.)
While OpenAI is the "King of the Hill", Google is the snowball rolling down it, getting bigger and faster every single month.
Here is the scary part for Sam Altman: Google is catching up to ChatGPT in downloads.
In November:
- ChatGPT: ~100.8M downloads.
- Gemini: ~67.8M downloads.
ChatGPT is still winning but Gemini went from jogging to a full sprint in less than a year.
So how is Google pulling this off?
That’s where things get ugly.
Stick around, because we’re about to explain why your favorite AI company is burning cash like a Taylor Swift fan buying front-row Eras Tour tickets.
FUSE ENERGY RAISES $70M AT A $5B VALUATION
Is this the most legit energy company to ever enter crypto?
Fuse Energy is a $400M ARR utility powering 200,000+ homes, today announcing a $70M Series B at a blockbuster $5B valuation.
This comes after the recent beta launch of The Energy Network, a new digital layer engineered to scale our grids and save billions in costs.
And now, it’s just building its momentum:
- Today raised $70M in Series B led by Lowercarbon and Balderton
- Now valued at $5B
- Launched beta on Solana
- Received landmark no-action letter from the SEC last month
- Planning listings for early 2026
A new foundation for the grid is coming.
Check out their announcement here and follow Fuse on X for updates.
GOOGLE VS. OPENAI: THE AI WAR NOBODY CAN STOP (P2)
Forget the tech specs. The only test that matters right now is the balance sheet test.
To understand why Google is terrifying Sam Altman right now, you have to understand the "Pizza Shop Economics" of AI.
Think of running an AI company exactly like running a pizzeria.
To bake the pizzas (generate answers), you need massive, expensive ovens (chips).
And right now, these two companies are playing the game with completely different rules.
OpenAI is the renter:
- The Ovens: They buy them from a guy named Jensen (CEO of Nvidia).
- The Kitchen: They rent it from Microsoft Azure.
- The Problem: The cost is too damn high.
Every time you ask ChatGPT “Can you rewrite this email so I don’t sound insane?” a tiny cash register rings in Azure.
OpenAI is paying a premium markup on the chips, the electricity, and the cooling.
Hence why HSBC forecasts that OpenAI is going to have roughly $400 billion in cumulative operating losses by 2029.
This is exactly why ‘OpenAI looking to raise money’ has become a recurring headline.
Seriously, if I had a dollar for every time Sam Altman passed the collection plate, I could fund their next round myself.
The newest one from last week? OpenAI is aiming to raise up to $100 billion, potentially valuing the company at $830 billion.
To understand how aggressive that is, here’s OpenAI’s valuation trajectory over time:
They are raising the money to pay their landlords.
Google saw this coming years ago and decided to become their own landlord.
While everyone else slept, Google:
- Built custom chips (TPUs).
- Owned massive chunks of its own data centers.
- Became the world’s largest investor in submarine internet cables.
Because they own the entire "stack" from the chips to the pixels (see what I did there?) on your screen.
They essentially don't pay "rent" the same way that OpenAI does.
This allows Google to do something OpenAI simply can't: win the price war.
Google can sell AI for pennies because their costs are dramatically lower and they’re one of the most profitable companies on Earth.
To put this in perspective: while OpenAI is burning billions, Google’s profits are up over 800% since 2017.
That profit engine lets Google pour money into data centers and TPUs like its pocket change.
This creates a slow, suffocating death spiral for everyone else.
Why Google doesn’t need downloads
But owning the stack doesn't just save money, it lets Google cheat on how they get the product to you.
OpenAI has a distribution problem.
To use ChatGPT, you have to unlock your phone, go to the App Store, download the app, log in, and remember to open it.
OpenAI is like a door-to-door salesman knocking on your front porch.
Whereas Google is the house. They own the phone (Android). They own the browser (Chrome).
They own the email (Gmail). They don't need you to download anything.
They are already baking Gemini directly into their operating systems.
OpenAI is fighting for every single download.
Google just has to play the waiting game.
They can let habit + default settings do the work over time.
Does that mean it’s game over for OpenAi? Absolutely not.
Sam Altman knows he can’t compete against Google’s free ecosystem by playing nice, so he’s preparing a war chest that would make a small country jealous.
Sam’s strategy is simple: spend so much money on compute → make the models significantly better → capture the market by pure, brute-force intelligence.
He is even confident enough to raise revenue projections, betting on a massive climb from roughly $4 billion in 2024 to $200 billion by 2030.
We expect this battle to heat up as we inch closer into what’s shaping up to be a long war.
Google may look like the winner on paper, but never count out the ability of "Scam Altman" (as Elon and the internet calls him) to pull out some game-winning moves.
For now, my money’s on Google.
Alright, that’s it for this edition of Milk Road AI, but we’d love to know what you think.
Who wins the AI war long term?
- OpenAI
- Too early to tell
WHAT THE MARKET IS MISSING 🚀
In the Rollup this past Friday, Patrick & Duncan sat down with LG to talk about what investors are getting wrong about the so-called AI bubble.
Here’s what you’ll hear:
- Why the funding model for AI buildouts is healthier than headlines suggest
- How CoreWeave and Oracle’s credit stress is overblown, and what’s really driving market fear
- Why compute and power, not capital, are the true bottlenecks
- What investors should watch to track the next wave of AI infrastructure plays
Tune in and see for yourself 👇
YouTube | Spotify | Apple Podcasts
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BITE-SIZED COOKIES FOR THE ROAD 🍪
Adobe is facing a proposed class-action lawsuit over its AI training practices. Authors allege the company used pirated books to train its SlimLM AI model without consent.
ChatGPT is opening its platform to third-party apps with a built-in app store. Developers can now submit apps for review, following early integrations from Spotify, Zillow, and Canva.
Meta is developing new image, video, and text AI models for a 2026 release. The effort is led by its superintelligence lab as Meta looks to regain ground against OpenAI, Google, and Anthropic.
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